What a £4,700,000 ‘black hole’ tells us about the murky world of defence funding

Britain's Prime Minister Keir Starmer addresses the press at the end of the meeting of state leaders of the European Group of Five (E5) and the NATO Secretary General, on June 24, 2026 at the Chancellery in Berlin, Germany. (Photo by Ludovic MARIN / AFP via Getty Images)
Sir Keir Starmer after a meeting of state leaders of the European Group of Five (E5) and the NATO Secretary Genera last week (Picture: AFP via Getty)

Why is it so hard to pull together a Defence Investment Plan, anyway?

Looking at the document published on Tuesday, it’s a little hard to see why it took more than a year. There are plenty of details about what’s being funded, but the hard bit – setting out where the money’s coming from – is very, very fuzzy.

In fact, we only know two projects that face being scrapped to pay for the much-heralded boost in investment for defence.

That’s right, two projects across every government department over the next few years, and they’re both in the Department for Transport. They are the A38 junctions at Derby and the A46 Newark bypass. That’s it.

Every other department has committed to finding 1p in every £1 from their capital budgets to put in the defence piggy bank (with the Department of Energy Security and Net Zero adding an extra couple of billion on top) but we still don’t know how or where.

Yesterday, a government spokesman said those details will come by autumn. He wouldn’t even confirm that the decisions about where the axe will fall have been made yet.

BERKSHIRE, UNITED KINGDOM - JUNE 30: Prime Minister Sir Keir Starmer and Chancellor of The Exchequer, Rachel Reeves during a visit to Malloy Aeronautics in Berkshire following the publication of the long-delayed defence investment plan (Dip). on June 30, 2026 in Berkshire. (Photo by Stefan Rousseau - WPA Pool/Getty Images)
Starmer and Chancellor Rachel Reeves have been under pressure to find more money for defence (Picture: WPA Pool/Getty)

So, back to that initial question – why did this take so long?

One clue might lie in the deep animosity between the Ministry of Defence, which was asking for money, and the Treasury, which was figuring out where to find it.

To show what sits behind that, we’ll need to dive into the murky world of defence funding.

The Ministry of Defence has an extraordinary talent for wasting money. And by ‘wasting money’, I don’t mean ‘spending money on things I don’t agree with’ – I mean waste.

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Government spending watchdog the National Audit Office revealed in December that the MoD in 2024-25 reported £1.9 billion of losses, defined as ‘transactions where public money is spent but no benefit is received’. (A little over £1.45 billion of this appears to come from the early retirement of Chinook helicopters and other equipment in November 2024.)

And it’s more than that – a separate report from the NAO found the MoD is also pretty terrible at recovering the considerable amount it loses to fraud.

The government sets a target that every £1 spent on counter-fraud should save £3. Over the past four years, the MoD has managed just 48p for every £1 spent.

Defence Secretary Dan Jarvis speaks with chief engineer of the Skyhammer project Fraser McKay (left), during a visit to defence company Cambridge Aerospace in Cambridge, to formally open the company's first full manufacturing facility. Picture date: Wednesday July 1, 2026. PA Photo. Photo credit should read: Leon Neal/PA Wire
Defence Secretary Dan Jarvis speaks with chief engineer of the Skyhammer project Fraser McKay (left), during a visit to defence company Cambridge Aerospace in Cambridge (Picture: Leon Neal/PA Wire)

Then there are the major projects. The MoD handles more major projects than any other department – think building vessels and aircraft and large weapons systems.

There were 45 in 2024-25, of which just three appeared ‘highly likely’ to be successfully delivered according to the government’s infrastructure agency NISTA. The successful delivery of a further 10 ‘appears to be unachievable’, the body said.

With all that in mind, it’s not hard to imagine that Treasury officials might see sending money to the MoD as the equivalent of throwing it in the Thames. Defence bosses were asking for £28.5 billion – who knows how much of that would end up leading to tangible results?

But here’s the thing: defence boils down to having better tech than those who wish to harm us. That means constantly upgrading, which means innovation, which means experimentation, which means waste.

British Army soldiers from 3 Rifles check a single-rotor helicopter style Ghost drone, which operates via global mobile networks and can be remotely piloted from anywhere in the world with extreme portability and uses AI software to help soldiers to let the drone autonomously identify, classify, and track objects of interest in a battle. The all-weather resilient Ghost drone is being used to keep eyes on the battlefield at an undisclosed training ground less than 50 kilometres from the Russian border in Finland where NATO troops are taking part in Ex NORTHERN STAR, led by the Finnish military, where coalition soldiers from work alongside their NATO allies and train in combat to deter aggressive neighbouring states. The large scale ground exercise, comprising of around 4,000 coalition troops include the use of these new technologies, including both the Ghost reconnaissance and Bolt attack drones alongside newly adopted Android Team Awareness Kit (ATAK), which is a phone-sized electronic screen displaying GPS and geospatial mapping with real-time locations of troops, allowing commanders to see the entire battle picture instantly, locating friendly forces and striking enemy targets. Picture date: Monday May 25, 2026. PA Photo. Photo credit should read: Ben Birchall/PA Wire
Drones are becoming more and more prevalent on the battlefield (Picture: Ben Birchall/PA Wire)

If 10 out of 45 projects are destined to fail, then so be it. We’re not talking about high-speed trains here. The UK need to keep finding new ways of keeping Russia on its toes – after all, it’s not just a matter of supporting Ukraine. They’ve been targeting our Prime Minister with arson attacks.

Much more will be said about the investment plan in the coming months, as Andy Burnham faces working out where the hammer will fall. No doubt, though, there are many people behind the scenes who are relieved it’s out in the world at last.

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